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#400 – “Whataboutism” – The Philanthropy Challenge

January 18th, 2021

Richard Marker

It is rare that we experience a moment of moral clarity. 6 January 2021 was one of those rare times.

Shockingly, though, there were those whose moral compass was so askew that they immediately reverted to “what about….?” Most often they tried to ascribe equivalency to BLM protests or some mythical Antifa or … as a way to deflect from the horrendous nature of what we saw, know, and felt. But as so many commentators have said [and to which I alluded in #399], it is a morally corrupt equivalency. Legitimate protest, even if on a very few occasions when a small number destroyed property, is not the same as sedition and insurrection.

Any reader who still doesn’t understand that isn’t going to be persuaded by any words I would add. If you are one of those, I am not sure what moral compass directs you, but as an ethicist, I am concerned that it needs to be reset to due north.

As it happens, though, most choices in life, and certainly in philanthropy, are not so clear. There usually are tradeoffs, considerations, more than one honest and legitimate perspective. The options may not all be equal, morally or functionally, but they usually deserve a hearing. At minimum, understanding another perspective can help clarify tradeoffs.

Every funder uses “what about” all the time when making a funding decision. It is part of our due diligence. Indeed, if we didn’t, we wouldn’t be doing our job. Since there is never enough money to fund everything, we have to make hard decisions knowing that some are going to be happy and some disappointed. More to the point, every grant has risks – by definition – since we are always funding the future and, as 2020 taught us in spades, there are no certainties in the future.

Due diligence should have limits – of two kinds:

1. Utility: In an exercise I use when teaching funders, we list approximately 30 criteria that a funder might consider but may only use 10 of them to make the funding decision. The exercise is more robust than this, but it quickly becomes clear that most criteria are either irrelevant or ignored when actually making a decision. Other considerations are certainly legitimate, but if a funder isn’t going to use them, why impose them on a potential grantee when submitting a proposal? Both sides have better things to do with their time than to simply have information that ends up as clutter. “What about….” should apply to real decision making.

2. Appropriate: Sometimes “What about…” can veer into side issues. I was recently interviewed by a very prominent newspaper about a philanthro-ethics issue. The situation: a significant funder/board member of a prestigious cultural institution was revealed to have had a long-term friendship with someone who had been found guilty of major criminal activity. The journalist asked if the cultural institution should expel the funder from its board because of that friendship or should funders stop supporting this institution because of this association. When I asked if there was any suggestion of wrongdoing by the funder, the journalist responded that there was none as far as he knew. My response was that guilt by association is itself unethical. While the institution may want to address some potential PR questions, there was nothing in the facts as presented that should in any way impact a funder’s decision.

“What about…” is not a static question. In 2021, a question about the racial or demographic composition of staff and board is hardly irrelevant. How one weighs the answer is not so straightforward, but the question itself reflects a sensitivity toward philanthropy’s long overdue responsibility to address systemic inequity. When I first started teaching funders 2 decades ago, the standard response of funders regarding this question was that it was none of our business; today, the majority of those in our courses feel that it is.

When does “what about…” cross over into “Whataboutism?”

a. “What about..” is a question used to inform; “Whataboutism” is used to deflect.

b. “What about” is to elucidate; ‘Whataboutism” is to obfuscate.

c. “What about” is to arrive at a judgement, however difficult; “Whataboutism” is to avoid judgment, however straightforward.

Let’s look at examples that are relevant to our philanthropy sector:

• Food insecurity: “What about…” are the questions we should ask about how to make sure that SNAP funding and the equivalent get to as many people as possible. If food insecurity has been an embarrassing – and avoidable – reality in the USA before, COVID19 has exponentially increased the tragedy. Funders can ask real questions about how to leverage our resources and advocacy most effectively. Whataboutism finds the infinitesimal number of those who misuse SNAP access as an excuse to deprive funding.

• Voting Rights: Given the history of voter suppression in this country, and the sense of disenfranchisement felt by too many, especially POC, “what about..” questions of increased registration, protection of records, and more are appropriate and felt needs that funders can address on a local, state, and national level.. “Whataboutism” is using largely fictitious or extraordinarily rare examples of voter fraud to suppress votes, disenfranchise swaths of the population. Such thinking has no place in the philanthropy world.

• Government Financial Support for Citizens: There may well be legitimate questions about the best way to redress the unconscionable growing financial divide in the USA. The philanthropy sector, on the whole the beneficiaries of this divide, should have a mandate to advocate for systemic solutions. There is certainly space for “what about” thinking as we weigh various interventions; after all, if it were easy it would have been solved a long time ago. “Whataboutism” is trying to block any funding for the unemployed, the undereducated, the underpaid, and the vulnerable on the basis that some recipients might not really need it.

Health care, housing, education are some other areas where similar thinking applies. If we have learned anything from this extended pandemic, and the belated [for too many] recognition of endemic inequality, it is that there are right “what about” questions – the ones that genuinely try to speak to the hard questions of societal amelioration.

We have also learned that some questions are destructive and counterproductive – and we call those “Whataboutism.”

#399 – White Supremacy in All of Its Manifestations: Philanthropy’s Obligation

January 8th, 2021

Richard Marker

It cannot be said enough: what we witnessed was White Supremacism in all of its ugly manifestations

“Everything that can be said has been said, but not everyone has said it.” This has been attributed to Winston Churchill, Abba Eban, and, for all I know, a longer list.

I wrote the first version of this post as I was sitting transfixed before my television on Wednesday. As others began to post what I was thinking and writing, I thought to hold back wondering if there is a need to reiterate those thoughts

Surely, there is nothing more I can add to the thoughts about this nadir of national leadership represented by a sick and destructive POTUS and his shameful enablers these past four years. History, and hopefully the voters and the legal system, will hold them fully accountable. Besides, long time readers are well aware of my unequivocal opinions on that.

And there is little more to say about the judgement of the seditious terrorists who commandeered the US Capitol for several hours. If there are any in the world who still don’t get it, my words are not going to convince them.

But what I finally did feel was important to comment on was the all too evident racism in the security breakdown and, as I will repeat later on, it must be said by all of us.

As one who has now entered the “elder” stage of my professional life, I can attest to having attended countless rallies, protests, marches, demonstrations, and more – going back to the mid-sixties. Over the years, I have seen various levels of security, attitudes by the police, and preparedness. So, the limited preparedness of that on Wednesday was glaring since it defied logic or historic precedence. On occasion, the security is too prepared – and become themselves guilty of disrupting peaceful expressions of free speech [we are all too familiar with recent examples in the BLM marches], but in fairness, more typically they are just a visible symbol of power. Never have I seen what we all witnessed on Wednesday – a shocking absence of security for the Congress or even a presence along the announced route from the White House to the Congress.

None of this was secret or a surprise. The claims to the contrary are disingenuous as so many in the press have already articulated and demonstrated. White supremacist terrorists got a pass – and were allowed to walk out at their own pace and without immediate arrest. Pretty clear to any viewer.

Why then do I feel the mandate to add my own voice now when so many have already done so? Because it seems that too many of those who have publicly called out the unconscionable difference between the response to BLM or immigrant rights marches and this one are themselves POC. And that must not be, for that makes their observations seem self serving and tokenistic.

As an “old white guy”, my voice must be no more quiet than those of POC. My outrage must be no more muted than those whose legitimate outrage has been reinforced by painful real-life experiences. My own commitment to holding those responsible for tolerating xenophobes, racists, nativists, neo-Nazis, white supremacists must be no more subdued than those who have been victimized directly both by police and by these terrorist thugs.

Now, l don’t say all of this simply as an “ally.” The concept of “ally” is problematic because it seems to suggest that what happens is only to “them.” I do this because it affects us as well. A society that tolerates racism, that averts its eyes before restrictions of authentic civil liberties, that abets public policies that foment lies and discord, that perpetuates unequal treatment before the law, the police, housing, and employment, is one that diminishes all of us.

So, as one who has been in the philanthropy world for a long time, I implore our sector and my colleagues to not be silent, not to fear public advocacy, not to shirk our responsibilities to foster and fund a more just social fabric.

We too will be judged by how we respond to moments of challenge to the social weal. I add my voice to others in our field who have spoken and acted. I hope those of you who have not yet done so will join me in these commitments.

#398 On Becoming an “Elder” – and Celebrating it

December 28th, 2020

Richard Marker

Our latest VLOG post from the Wise Philanthropy Channel

Announcing the Wise Philanthropy YouTube Channel [A request for you to subscribe]

November 19th, 2020

Richard Marker

A REQUEST: Please subscribe.

The Institute for Wise Philanthropy has launched the Wise Philanthropy channel on YouTube. It is now live albeit still in the construction phase. Over time, we will be posting opinion vlogs, abbreviated and selected educational offerings on best practices, and interviews/discussions with others in the philanthropy world.

As we begin to populate the content on the channel, we invite you to subscribe. There is no cost or obligation, and the process is very straightforward [Simply go to YouTube and search for Wise Philanthropy; press the subscribe button]. This will allow us to formulate the most appropriate content going forward, and be responsive to your needs and interests. [ALERT: Please be aware that there are some other sites with very similar names. Ours is simply the Wise Philanthropy channel; for now, you can identify it easily by seeing the videos featuring Richard Marker.]

Among the pieces already in the works are:

– Why Advocacy is a Mandate, Not an Option, for USA Philanthropy

– The Big Lie[s] – Philanthropy’s Opportunity and Dilemma in the Post Election Moment

– A Multi-part Series on Personnel Practices and Cautions

– Strategic Plans are Passé; Scenario Planning is Yesterday’s News; What now?

– We are pivoting so fast that we’re dizzy; will the changes we are now seeing in philanthropy practice survive the pandemic?

and more….

As always, thanks for being colleagues and friends. We look forward to hearing from you.

#397 American Exceptionalism Dies On the Petard of Masks

November 4th, 2020

Richard Marker

It is sad and more than a bit embittering to be living through the end of any illusions of American exceptionalism.

I will leave it to the unwritten future to decide if American power and influence has already had a similar demise, but make no mistake, we are witnessing the same fate as every single empire in history. Every one of them ultimately failed, and most failed for very similar reasons: hubris and belief in their own uniqueness and exceptionalism.

As this is written, the results of this terrible, divisive, and cruel election season are not yet fully known. But the lessons are there no matter which candidate is ultimately the victor. That half of Americans have endorsed a candidacy and a term of office that has committed itself to deny civil liberties, and constitutionally guaranteed rights, and the integrity of the separation of powers, and basic human decency is loss enough. Never before has an administration been so hell-bent on destroying what is meant by Americanism.

This is not a romantic elegy to a perfect American past, one that never existed. Endemic racism, economic inequity, xenophobic tendencies, religious bigotries, and more are cancers within the body politic and infect the purity of that history. Political leaders have long manipulated the system for personal gain and political power. But for much of our history, there was at least a cosmetic belief in the integrity of the system – even when pushed to the edge. As far as I know, never has a POTUS so disregarded the system so boldly, have sycophants been willing to be so flagrant about their self-interest, or have such a large percentage of the populace been willing to avert their eyes when presented with demonstrated dishonesty – even to their own detriment.

Many others have written with far more expertise than I on the psychopathology of the fake presidency of the last 4 years, and of the millions of those who choose to follow him. This piece will focus on a different issue – the distortion of the American experiment.

Any who have taken seminars with me or attended conferences where I have spoken on the history of American philanthropy have heard me contrast the underlying concept of the US and most of the rest of the world. In the US, rights OF individuals are primary; in the Napoleonic concept of society, the responsibility TO citizens is primary. We see this in very stark terms when we explore why the US does not guarantee health care, etc., nor make higher education affordable. At the same time, as observers as early as de Tocqueville noted, the US evolved a system of voluntarism to provide what government didn’t or wouldn’t. In other words, the underlying ethos was not that Americans didn’t care about their fellow citizens, only how they would be cared for. [For the purpose of this essay, I will not offer an in-depth analysis of what works, what doesn’t work, and the limits of the capacity of each system. I am restricting my thoughts only to the underlying concepts.]

To say this again: most Americans historically understood that there was a tradeoff for individual liberties; that is voluntary compliance and civic participation. They implicitly understood the “compact” that one without the other is neither viable nor moral.

The change didn’t happen suddenly in 2016. It has been brewing for years. Robert Putnam’s “Bowling Alone” popularized what had already become a prevailing reality. Americans lived atomized existence, were expected to fend for themselves in saving for retirement after the end of defined benefit plans, and were further expected to go into debt to pay for the education credential increasingly required to sustain any middle class standard of living. As much as distorted tax policy created the unconscionable concentration of wealth, the fact that the middle class has to incur so much personal obligation essentially served to give them a competitive leg “down” in adulthood. Is it any wonder that middle class comparative standards of living have been declining for over a generation?

If the “society” – writ large – didn’t care enough, why should individuals care enough to support others. That doesn’t mean that no one was charitable or philanthropic or generous. It did mean that there was an erosion in the idea that government was on their side. And, after all, that is what people have heard since the time of Reagan. Politicians swore to cut taxes – as if taxes are an inherently bad thing – regardless of the costs to livelihoods and wellbeing. Let the private sector or the voluntary sector take care of people – and too bad for those who can’t make it.

It is no accident that Medicare is not understood by many people to be government insurance and Medicare itself goes to lengths to mask that it is. Nor is it an accident that some politicians feel that the lifetime contract with workers to guarantee social security is dispensable and violable. After all, who are all these citizens to feel “entitled”? [forgetting, of course, that we all pre-paid for those retirement funds with every paycheck for our entire working lives.]

I suspect that readers of my articles know all of this and I can rely on the short-hand examples to make the case. But it appears that the last shredding of universal commitment to an ethos of caring for others was the mask test. The politicization of the wearing of masks these past 8 months was unforgiveable, but that it resonated so broadly was the body blow to “the caring for others” part of the American compact.

The angry, hostile, bizarre, and destructive rejection of wearing masks under the notion of individual liberties can only be understood by the absolute rejection of any assumed responsibilities for any other. Our long-standing system of providing a culture of caring, albeit through voluntarism, dissipated into vigilantism – over the wearing of masks. Even something so evident, so lifesaving, so simple was too much for too many. No longer was personal responsibility the trade-off for personal liberty. Only that which served their own self-interest mattered.

It is probably true that the POTUS, who may or may not have been re-elected when you read this, intuited this. His entire life has been built around snubbing his nose at any responsibility for anyone except himself. That didn’t stop these last 4 years when he putatively had responsibility for almost 350 million Americans. If the POTUS could only care for himself, why, his followers reasoned, should they be different? Let the Republic and our future be damned.

Even if Biden is elected, and his policies and affect do begin to restore some sense of decency, we will have a very long way to go to reestablish the underlying compact that defined the American experiment: radical freedoms with assumed universal voluntarism. It is by no means clear to me how he or we will do that, but without that or some other profoundly transforming affirmative change in our current national ethos and public policy, we will simply continue our sad trek through the last paragraphs of the history of just the latest failed empire, the once worthy American Experiment.

OPAL Panel on Philanthropy Responses to COVID 19 [video]

November 1st, 2020

Richard Marker

https://drive.google.com/file/d/1XyHI7UYp8VLqWnfSjveT8RcQ-L6HN7YC/view?usp=sharing

OPAL Panel on Successful Philanthropic Partnerships [video]

November 1st, 2020

Richard Marker

https://drive.google.com/file/d/1Yy_DAQA1tIFgrah-pPsNSLkFeBgA5mJm/view?usp=sharing

#395 The Myth of Perpetuity

October 23rd, 2020

Richard Marker

Please note that much of this article alludes to U.S. foundation law. Laws regarding charitable and non charitable foundations differ extensively around the world. Nevertheless, the question of perpetuity applies broadly even if some of the specifics of this article are more limited.

Some years ago, a very prominent Wall Street financier and his wife, herself a very prominent philanthropists, gave a headline grabbing gift to a world-famous museum. The most famous gallery in that museum would henceforth bear their names.

At the time, the story was making the rounds that the museum promised this couple that the gallery would bear their name in perpetuity. The financier asked, “how long is perpetuity?” The museum replied, “75 years.” The couple accepted those terms.

I am not sure if the story is apocryphal, but I was acquainted with the couple and it certainly could have been true. Whether or not, though, it gives an important message about “perpetuity”, one that is worth revisiting at a time when foundation “perpetuity” is on the tables of the philanthropy world.

Before proceeding, it is worth noting that US law does not guarantee perpetuity for foundations. In the US, the law requires a 5% payout plus excise tax regardless of earnings. If the foundation earnings don’t reach that level and beyond, the corpus will shrink; if there are several consecutive years of lower earnings, the corpus will continue to shrink exponentially. If the law wanted to guarantee perpetuity, the law would adjust the spending rate to reflect earnings or at least C.O.L. It doesn’t.

Perpetuity, therefore, is an intention. And indeed, perpetuity is a very, very long time. In my own professional experience, the oldest continuing foundation I have advised was about 500 years old and struggling how or if to continue since all of its legally mandated conditions had long since become irrelevant or expired. Most foundations, even those that aspire to “perpetuity” are much, much younger than that. I wonder how many of them really believe that they will be around in 500 years.

A more accurate description, then, of these foundations is “open-ended with no pre-determined time limit.” The hope of the founder is that successor trustees will align spending, investments, and governance policies sufficiently well to keep it going to make an impact generations hence but history has shown that true immortality requires something more than a large bank account.

This adjustment of the concept is consequential in terms of foundation decision-making. Most of us have been in rooms when one or more trustees makes clear what they believe their role is to be “stewards” of the foundation resources to last for generations. If perpetuity is the defining variable, stewardship is a credible approach to their role, and their approach to the foundation’s philanthropy.

The problem with “stewardship” as the primary motivator of philanthropic decision -making is that it focuses more on the finances and less on what the money can do. This is not to dismiss the authenticity of respecting donor intent, i.e., honoring the legacy of the family and foundation founders, but, functionally, it often means taking the most restrictive approach to the resources. True, if properly conceived, a “perpetual” foundation can serve to keep family connections alive, to remember the impact of the founder, to exert influence in a particular place over time. However, in too many cases, the idea of “stewardship” is so engrained that it instinctively negates public benefit investment strategies, and it serves to diminish the willingness to take even prudent risks with philanthropic dollars.

The flip side of “stewardship” is not “spend-out” – we’ll come to that later. It is, rather, to start from a different mentality that focuses on the philanthropy and not the money, i.e., the mentality of what good can our philanthropic investments and grantmaking make during the time it is under our auspices. The challenges at any given moment, and certainly of any given generation, can never be fully anticipated, no matter how prescient one may be. Therefore, current trustees can feel fully empowered to makes decisions that may respect their legacy while being thoughtfully creative. This approach refuses to kick the hard decisions down the generational road but accepts them now. And it recognizes that each successor generation should feel similarly empowered.

Not long ago, I had the privilege of working with a family foundation the size of which was about to grow well into the upper 9 figures. The family knew that not long from that time, the responsibilities of succession would fall upon them. Yet they were a bit stymied because they couldn’t get the founders’ generation to articulate what they wanted their foundation to do and be. Finally, the widow of the founder made it very clear that she wanted them to be free to decide. After all, she said [here slightly paraphrased], “I could never have imagined what the world was going to be during my lifetime. How can I know what my grandchildren’s and great grandchildren’s world will be like? They have to be free to make their own decisions.”

This decision liberated those generations at the table and those not yet born to be empowered and not simply stewards of inherited wealth. There was no implied message of perpetuity, but there was also no time limit on how long the foundation should continue. The presumption was that subsequent generations need to be empowered to decide that question as well.

Let’s now come to the question of “spend-out” or “time limited” mandates. This is, of course, not a new discussion – Andrew Carnegie and Julius Rosenwald were two extraordinary and influential philanthropists who made quite different decisions. Various Carnegie endowments continue to this day; Rosenwald specified a terminus ad quem for his foundation Most of those who have established endowed foundation assumed that they were to last indefinitely. It is certainly true that most wealth advisors would recommend investment strategies consistent with those assumptions.

There are, though, two significant challenges to the idea of open-ended foundations. One is efficacy, the other ideology.

The efficacy argument is an easy one: if one wants to address a problem – whatever that may be – a dollar spent today is better than 5 cents. Why not throw as much as possible on an identifiable and presenting scientific or social or educational issue on the certainty that it will surely make more of a difference now and may even solve a problem. [e.g., the Diamond Foundation’s successful “all-in” on HIV-AIDS.] And, while no one can anticipate new challenges in the future, the more one can solve today, the more likely those unanticipated ones can be addressed effectively in their time.

The ideological one is quite different. It challenges the very nature of [mostly] tax free accumulation of wealth controlled by those who had nothing to do with the creation of that wealth. [For this article, I will table the much-needed conversation about the shocking transfer of wealth from the middle class to the very wealthy we now have in America. And I will also defer comments on “The Giving Pledge” to another time] A foundation that lasts for generations essentially transfers power from generation to generation, perpetuating a class and economic divide. Those who control perpetual/time-unlimited foundations can exercise that power without accountability for their decisions [other than that required by law]. Indeed, there is no requirement that the intended beneficiaries have any say in the decisions even though they are the ones most impacted. This conceptual challenge is not new but has become vivid and vital during the recent months as the USA has been forced to acknowledge our stark racial and economic divides.

Readers of this piece are well aware of some very welcome initiatives in our field to redress this. In prior articles, we have discussed the work of Participatory Budgeting, Trust Based Philanthropy, CEP, NCRP, and others and many other funders are struggling mightily with what all of this means for them. These initiatives try to readjust the power base, the decision making, and the accountability loop. But, with very few exceptions, these initiatives are agnostic about perpetuity.

A number of prominent foundations have made clear that they fully intend to spend-out their resources within a specified time. But it is not yet clear if those foundations are outliers or part of a new normal. [For the last few years, that is one of the most frequently asked questions when I give presentations on philanthropy trends to funders in the United States and around the world.] Some have already closed and much has been written about their decisions and their exit strategies. As one reads the motivations for doing so, there seem to be two motivations – the efficacy argument presented above, and the ability to make the decisions while still alive to do so.

I am happy to be proven wrong, but I have not seen any of the foundations choose to spend-out for the ideological reasons. One wonders, though, if that will change as an ever larger percentage of funders and philanthropists become self-reflective in the face of the challenges to inherited power, the recognition of endemic racism, and the moral repugnance to the unconscionable economic divide.

There surely is no one right answer to how long our funds should last, but I would urge all of us to drop the concept of “perpetuity” and replace it with “open-ended.” None of us lives forever – and until proven otherwise, neither does a foundation. What matters, in the end, and what makes a difference in how worthy our legacies, is not how long a foundation lives but how thoughtfully its resources are used.


The Institute for Wise Philanthropy has been educating and advising funders, philanthropists, families, and philanthropy associations around the world since 2002.

#394 Must Scale Be a Precondition for Sustainability? [Corrected]

October 13th, 2020

Richard Marker

This is a hardly a new question. [Long time readers may recall several previous articles raising similar questions: “Right Sizing…” Dec 2016; “Winning Small….” July 2018; et al.]

Most for-profit businesses rely on scale. Nonprofit business models struggle to achieve scale. Funders, deciding on the viability of their non-profit grantees, should ask the question. Is scale a precondition for long term sustainability? Should it be?

The issue is more poignant and pressing today than ever. The viability of many in the non-profit sector, the conceptual and capacity challenges to funders everywhere, the recognition that philanthropy can never be separated from public policy all converge to raise questions about whether the operative business models for non-profits of the last period of time can still be valid.

For the last couple of decades, the assumptions about non-profit viability has been heavily informed by b-school thinking. Funders of established organizations have pushed organizations to be less dependent on philanthropic giving and more on earned income as a measure of long-term viability. Start-ups are often rated by their likelihood of achieving disruptive scale.

Scale does matter: one needs look no further than the US embarrassment regarding COVID-19 testing. Literally millions of people have found it difficult to get tested – and when tested to get timely results. [Even though this is the political season, for this piece, I will exercise restraint in my opinions about why that is. I am sure any regular reader knows my feelings.] The inability to provide testing at scale has limited the ability of many in the USA to make safe and reasonable plans for their own behavior, and businesses, schools and communities have been handcuffed in knowing how or if to develop a new normal.

The same will be true when a genuine scientifically reliable vaccine or treatment becomes available. We will return to normal, whatever that will mean, only when they are available at scale.

Another example, about which the literature is overwhelming, is about food insecurity/hunger. In the USA, There is simply no functional alternative to SNAP funding to reach scale. [Perhaps a guaranteed income on which a family can really live would be an alternative but that requires major systemic re-thinking.] Food pantries, soup kitchens, and other local efforts are still indispensable, sadly, but none can systematically assure that the millions of families, children, undercompensated receive essential and basic sustenance.

We see this assumption in funders’ responses to innovation in both for-profit and not-for- profit sectors. On the for-profit side, a new idea doesn’t have to be as disruptive as an Uber or Lyft or Airbnb or any of the other disrupters to warrant initial or mezzanine funding; but to receive funding, it would have to have a credible business model which would bring it to self-sustainable scale in a reasonable time frame. There are capital markets at every stage of the process that make those risks viable, and there are even tax incentives to give those risks even a little extra push.

This is true on the social impact side of this as well. It is certainly acceptable and reasonable to achieve social good through for-profit investments. To take but one example: Once upon a time, support for solar energy fit neatly into the grantmaking side of a foundation’s portfolio, especially for a funder with a commitment to environmental sustainability. Today, such funding fits comfortably on the investment side since its financial viability and its positive impact are so clear to all but some recalcitrant deniers. [Full disclosure: we are personal investors in solar energy development projects both in the United States and Africa.]

It is far less easy on the not-for-profit side. Very, very few not-for-profits ever reach the stage where they can generate sufficient fees for service or endowment income to be fully self-sustaining without dependence on grants and charitable gifts. It is somewhat easy to get limited start up funds for an innovative project but the larger a new organization gets, the greater the dependence on more and larger gifts. There is a very limited identifiable capital market for mezzanine and second stage not-for-profit organizations. The problem is that all too often funders have drunk the venture capital or impact investing Kool-Aid. “Will you be the disrupter that addresses hunger or poverty or homelessness or illiteracy? [you know, the little things.] And if not those, will your new project be sufficiently compelling that it will reach the scale, scope, and sustainability justifying the aspirations of both funders and creators? It is a rare not-for-profit that can credibly claim that business model.

The last 6 months have challenged those assumptions of what success should mean. Organizations that had built their business model around fees-for -service or government reimbursables have suffered greatly. The higher the percentage of reliance on those income sources, the harder it has hit. Organizations that relied more heavily on traditional grants and contributions had more reliable income, even if more variable than in “typical” years.

Moreover, as funders have become more committed to responding to a radically changed reality, many of us have frontloaded our giving, reduced our reporting requirements, and eliminated our restrictions. [How permanent those changes remains an open question – but for another time.] Locally/placed based grantmaking has resurfaced as a high priority for many, especially to direct service organizations.

What is evident in these changes is that scale can no longer be the primary driver. Of course, there may well be organizations that can deliver more, better, faster, and more efficiently even on the local level, but that doesn’t guarantee that they can do so everywhere and to everyone. If there are racial inequities, food deserts, uneven economic prices to pay for the pandemic, efficiency only takes you so far. Community based organizations may know the needs of their communities, and especially of micro-communities, that larger, more efficient organizations don’t.

I would hope that this corrective represents a welcome rethinking regarding sustainability. There are circumstances when sustainability cannot ever be based on program generated or endowment income.

There are even circumstances when scale becomes a counterproductive criterion. Permit one very real example to suffice: When I was CEO of a foundation 20+ years ago, we were involved in numerous funding collaboratives. One was in support of a very wonderful innovative program for and by young adults. Its ambitions were aligned with its capacities; its commitment to quality a reflection of the thoughtfulness of the founders; and its success commensurate with both. One of the funding partners believed that this was such a wonderful model that it should be scaled up. They persuaded the rest of us to hire a consultant who specialized in this kind of non-profit scaling. Sure enough, you are not surprised to read that at the end of the consultant’s extensive analysis, they came back with a series of recommendations about how to bring this boutique organization to national scale. [I was on record as disagreeing, but was outvoted, and if one is in a collaborative funding arrangement, there are ground rules.] Shortly thereafter, a development staff was hired, a new executive was selected, and a national roll-out was initiated. A year later the organization went out of business.

What happened? When the organization was small, local, and controlled by those who were peers of the target market, it worked great. When those folks were essentially relegated to program staff but no longer making the big decisions, it didn’t. Why? Because once it attempted to reach scale, it became a competitor to much larger, much better capitalized organizations. The agility and responsiveness that made it successful on the local level became impossible to achieve on the national level. While I know that I am not giving readers too many details here, suffice it to say that it was a classic case of funder overreach and the idealization of scale as a goal. We were simply wrong, and a jewel of a program became worthless.

Let me return to where I began. Scale does matter in addressing systemic issues; in fact, it is a sine qua non. There are times when anything less is not enough. But implementation is almost always local. And how to implement often requires local knowledge that a big picture funder may not have. We don’t always solve our most pressing problems if we only look at financial sustainability, equate capacity with scale, or dismiss the value of local innovation. Our funding commitments must include the vulnerable, smaller, and local if we truly want to bring impact to all.


The Institute for Wise Philanthropy has been teaching and advising foundations, philanthropists, families, and philanthropy organizations around the United States and the world since 2002.

Partnerships and Collaborations

October 7th, 2020

Richard Marker

The annual update of the Institute for Wise Philanthropy‘s check list for effective funder partnerships and collaborations is now available by request. This has been our most requested practical “how to” for over 10 years. Contact us if you would like your copy.

This is a link to a presentation on collaborations at a recent OPAL conference:

https://drive.google.com/file/d/1Yy_DAQA1tIFgrah-pPsNSLkFeBgA5mJm/view?usp=sharing


The Institute for Wise Philanthropy has been teaching and advising philanthropists, foundations, families, and philanthropy associations around the United States and elsewhere in the world since 2002.